20% VAT on foreign digital services E-Levy in disguise - Gideon Boako

Dr Gideon Boako, a Member of Parliament for Tano North, has criticised the Ghanaian government and the Ghana Revenue Authority (GRA) for allegedly circumventing legal technicalities to impose an increased tax burden on Ghanaians through the use of foreign digital services. Boako's assessment was published on October 16, where he lambasted the GRA's assertion that the Value Added Tax (VAT) policy on cross-border digital services does not constitute a new tax, but merely a mechanism to collect an existing one.

However, Boako strongly disagreed, suggesting that this differentiation doesn't alter the financial impact on consumers who were previously paying for these services without the added VAT charge. He pointed out that increasing the number of foreign companies obligated to charge and remit VAT could result in more consumers paying taxes on services they previously accessed without charge.

These services include digital subscriptions, online advertising, business software and educational platforms, among others. Boako reiterated that any policy that imposes an obligation or burden previously not borne by the consumer is considered a new tax. He emphasized that the economic impact on consumers should be a central focus of the government's explanation of the policy.

Furthermore, Boako argued that the 20% rate could disproportionately affect young entrepreneurs and small businesses, which rely heavily on paid online advertising and digital tools to expand their operations. Boako also questioned the existence of adequate measures to prevent double taxation, particularly in scenarios where foreign platforms or payment systems may levy additional taxes.

Boako urged the government and the GRA to be transparent about the policy's impact, stressing that legal justifications should not obscure the additional costs that consumers would inevitably face.